Mich. Governor To Propose Sales-Tax Hike for Education

Gov. John M. Engler of Michigan has announced plans to resolve the
state's self-imposed education-funding crisis by offering voters a
choice: approve a 2 cent sales-tax hike or face major cuts in funding
for schools.

The Governor told reporters this month that a 50 percent increase in
the existing sales tax would likely be a key component of his
school-finance plan, even though a similar increase was defeated at the
polls in June. (See Education Week, June 9, 1993.)

If the sales tax is not approved, public schools, which have been
stripped of using the property tax, will likely face a significant
reduction in funding in the 1994-1995 school year, Mr. Engler
warned.

The Governor remained adamant that the state would not revive
property taxes, which the legislature, with his backing, this summer
abolished as a source of $6.3 billion in school revenue. (See Education
Week, Aug. 4, 1993.)

"The property tax is gone and should stay gone,'' he declared.

But Justin King, the executive director of the Michigan Association
of School Boards, predicted that voters would resent "being
threatened'' and reject the new tax.

New Year's Deadline

The sales-tax increase would replace about $1.8 billion of the
revenue lost when property taxes were abolished, the Governor said, but
declined to discuss what other taxes he would propose.

Mr. Engler is expected to formally unveil the details of his finance
plan before the legislature on Oct. 5.

An Engler administration task force has recommended an assortment of
tax hikes, including an increase in the state business tax of up to 1
percentage point and a new tax on the sale of homes.

The Governor has set Dec. 31 as the deadline for enacting a new
school-finance system. The American Civil Liberties Union has
threatened to sue the state if it does not come up with a new system by
then, and Superintendent of Public Instruction Robert E. Schiller has
urged the state board of education to take similar action.

Governor Engler is still a long way from saying how the state will
come up with all the new sources of school revenue it needs, said
Thomas E. White, the director of government relations for the
M.A.S.B.

"How the heck do you raise that kind of money in this kind of
political environment?'' Mr. White asked.

"They are not going back to the property tax as the primary method
for funding schools,'' he said, "so they are going to gore someone's
ox, there is no question about it.''

Millages Held as Insurance

Lacking new sources of revenue, school districts around Michigan
continued this month to hold referendums on property taxes that may
never take effect.

By a two-to-one margin, Detroit voters approved a continuation of
the district's 32.25 mill property tax. Advocates pushed the measure as
needed to insure a school-revenue source if the state fails to act, or
if property taxes are revived.

But other districts have not been as successful in seeking new
funds.

Mr. White said voter anger and confusion caused by the scrapping of
property taxes have led to the defeat of many millage proposals.

At least 20 districts "are not sure how they are going to get
through the year without additional resources,'' he said.

Vol. 13, Issue 04

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